Skift Take

Skift has long speculated that online travel agencies might launch soft brands, and now Kayak is attempting to do so during a dire moment for the hotel industry. Whether independent hotels would see any value in using a software package through the Kayak app is a wide open question.

Travel-comparison site Kayak is launching into a new business, a 52-room tech-forward hotel in Miami Beach in partnership with Life House.

The Kayak Miami Beach, which was a Life House property that was a victim of the pandemic-induced travel collapse, will serve as a test lab for a Kayak-developed software package for independent hotels with the pitch being that it would capture all of the travel demand that Kayak can generate.

The property, according to Kayak co-founder and CEO Steve Hafner, would offer guests contactless check-ins and checkouts through the Kayak app, a trend that is hardly revolutionary. There would also be 24-hour access to hotel staff and support through the app, as well as amenities such as smart TVs and Marshall speakers.

Hafner told Skift Tuesday morning that the hotel software under development would aim to be an all-in one solution connecting property management systems, demand management, and communications, for example.

Additional properties are on the drawing board besides Miami Beach, Hafner said, adding that he would like to find a way give the software away to hotels for “free.”

Hafner acknowledged the shortcomings of sister company Booking.com’s attempt to sell hotel software to partners, saying: “I think you’re referring to BookingSuite, which didn’t work out as well as they had hoped.”

He said Kayak is building its hotel software package from the ground up.

“Timing and execution counts for a lot,” Hafner said, acknowledging that Booking.com experienced channel conflict with partners. In other words, big hotel chains partner and compete with Booking.com, and didn’t want to further strengthen the online travel agency.

Kayak, Hafner said, is a smaller brand and has a different philosophy and goals than Booking.com did.

The Kayak Miami Beach living room and bar.

The Kayak and Life House partnership, which is not exclusive for either party, is yet another sign that competition will heat up for independent hotels over the next few years.

Major hotel companies like Marriott, Hilton, and IHG have all touted deals with independent hotel owners to take on a brand affiliation — a process known as a conversion — hoping to propel growth during the pandemic when construction lending remains tight for new hotels.

Better visibility and distribution is a big part of the branded argument, but Kayak’s foray into hotels could be a major disrupter to potential conversion talks in the greater hotel industry.

That will take time, however. For now, Kayak is opening a sole hotel, which is slated to officially take guests starting April 11. The property is already accepting reservations.

Life House’s selling point to independent hotel owners is its low-cost model in operating in the so-called lifestyle or boutique hotel space. Kayak would boost distribution and visibility by highlighting Kayak-branded properties on its booking engine.

Kayak is not getting into the business of managing or owning hotels as Life House will run the Miami Beach operation. The property owner appears to be Raven Capital Management.

While Las Vegas-style resorts are likely not in Kayak’s future, and the company is not targeting brands affiliated with the likes of Hilton or Marriott for its developing software, Hafner indicated the company was looking at properties both in the U.S. and abroad in both the leisure and business travel space.

“We do intend to launch other Kayak-branded hotels,” he added. “We don’t intend for Kayak to be a hotel brand, but we do want to learn from having our own branded hotel.”

Hafner said one idea behind the Miami Beach property would be to use learnings from the property to jointly develop the software with Life House. Kayak intends to contribute consumer trends and pricing insights from the billions of travel queries it is privy to annually to enhance integrations with cloud-based property management systems, and co-develop “sophisticated distribution channel management.”

In that regard, as with Booking.com’s BookingSuite, independent properties would have to consider whether they want to entrust the distribution of their properties to a Booking Holdings brand, namely Kayak, given that the parent company has so much skin in the distribution game.

Kayak as a Soft Brand?

In 2018, Skift’s former hotel editor Deanna Ting speculated that Expedia or Priceline might become the next hotel soft brand. 

“What if there were less need for hotel owners to rely on hotel management companies like Hilton, Marriott, Hyatt, Wyndham, Choice, or IHG?,” the story said. “What if hotel owners just worked directly with online travel agencies, or even Airbnb, instead of paying hefty fees to the big brands or other consortium or marketing groups?”

From Hafner’s remarks Tuesday, it is clear that Kayak doesn’t intend to manage hotels, but the 17-year-old travel-price comparison business does seek to leverage its brand awareness to gain traction among independent properties, and guests.

The Kayak CEO said Kayak Miami Beach is not debuting because the company thinks it would enhance its profit and loss statement.

“We’re excited to reimagine accommodations with Life House,” Hafner said in a prepared statement. “Kayak Miami Beach provides a playground for guests and our development teams alike.”

The property is in a 1934 landmark art-deco structure, and a public rooftop area features a Middle Eastern bar and a restaurant, Layla.

The property is featuring a “cozy king” room for an introductory price of $229 per night.

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Tags: hotels, kayak, life house, soft brands, software, technology

Photo credit: Kayak CEO is pictured at the company's new hotel, the Kayak Miami Beach. Kayak

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